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A Public Choice Perspective

Edited by Giuseppe Eusepi and Friedrich Schneider

This book makes a valuable, analytical contribution to recent debates on the ongoing institutional changes occurring within the European Union. It provides a comprehensive and diverse insight into a variety of areas, including in-depth studies of fiscal, monetary and voting issues, to help elucidate the current period of transitional change.

Chapter 9: A small country in Europe's integration –generalizing the political economy of the Danish case

Monograph Chapter

Extract

9. A small country in Europe’s integration – generalizing the political economy of the Danish case Martin Paldam* INTRODUCTION: THE SMALL-COUNTRY PROBLEM 1. This chapter presents a simple model explaining the stylized facts about the behavior of small countries in big unions. It is done by considering the Edgeworth box for a voluntary agreement between a small country, ‘Sland’, and a big organization, ‘org’. The model is fairly general, and it is illustrated by the case of Denmark in the EU. The subject of the chapter has been much discussed in all small EU countries, but few eﬀorts have been made to make a formal theory.1 The model has other uses, as will be brieﬂy sketched in section 4.5. The chapter proceeds as follows: section 2 deals with the set-up of the analysis. Section 3 considers the gap between the elite and the population, while section 4 puts the model together, and considers several possible cases. Section 5 discusses the long-run dynamics of the union, and the possibility that the resistance of the population of Sland to the organization will erode over time. Finally, section 6 concludes as regards the longer run. 1.1 Two Stylized Facts The starting-points of the analyses are two facts about the European Union (EU): (F1) EU is less popular the smaller the country. (F2) EU is (much) more popular in the elite than in the population at large.2 195 196 Voting and contracting Table 9.1 EU membership and country size Membership status Original Founder...

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